Robinson v. Smith

• Citation: 62 Minn. 62,64 N.W. 90
• Parties: ROBINSON v. SMITH ET UX. (TWO CASES).
• Decision Date: 10 July 1895
• Court: Minnesota Supreme Court

62 Minn. 62

64 N.W. 90

ROBINSON

v.SMITH ET UX. (TWO CASES).

Supreme Court of Minnesota.

July 10, 1895.

(Syllabus by the Court.)

1. Possession of a negotiable promissory note payable to bearer is prima facie evidence of ownership thereof, and such is the rule whether it is transferred before or after maturity.

2. The term “innocent purchaser,” as used in the proviso to section 2214, Gen. St. 1894, means a bona fide indorsee or bearer, within the law merchant.

3. One Morgan was such bona fide bearer of certain usurious notes, which he had purchased before maturity, for full value, in good faith, without any notice of any rights or equities of the makers and with no intent to evade the usury laws of the state, and after the maturity of the notes he sold them to the plaintiff for a valuable consideration. Held, that the plaintiff took the notes freed from the vice of usury, and with the same right to enforce payment of them that his transferer had.

4. Held, that the findings of fact of the trial court, also its finding that a certain stipulation had not been complied with by the defendants, are sustained by the evidence.

Appeal from district court, Jackson county; P. E. Brown, Judge.

Action by Leslie J. Robinson against John T. Smith and wife. From an order denying a motion for new trial, and from judgment entered, defendants appeal. Affirmed.

Wilson Borst and Lorin Cray, for appellants.

J. G. Redding and J. W. Seager, for respondent.

START, C. J.

Action upon four negotiable promissory notes, each for $1,000, dated October 1, 1883, due October 1, 1888, executed by the defendants, and payable to James S. Parsons, or bearer. They are a part of a series of notes secured by a mortgage which was decided by this court to be usurious and void, in the case of Smith v. Parsons, 55 Minn. 520, 57 N. W. 311. Cause tried by the court; judgment directed for plaintiff for the amount of the notes; motion for new trial by defendants; denied; judgment entered; and defendants appeal from the order and from the judgment.

1. The answer denied the transfer of the notes to the plaintiff, and upon the trial the plaintiff produced the notes, and introduced them in evidence, and rested. Thereupon the defendants moved to dismiss the action because there was no proof that the plaintiff was the owner of the notes. Denied, and defendants excepted. The ruling was correct, for the possession of a negotiable promissory note payable to bearer is prima facie evidence of ownership, and such is the rule whether the note was transferred before or after its maturity. Such a note is assignable by delivery in accordance with the custom of merchants. 1 Daniel, Neg. Inst. § 729; Murray v. Lardner, 2 Wall. 110.

2. The trial court found that before the maturity of the notes, and on December 13, 1883, James S. Morgan, in good faith, and without any notice or knowledge of any rights or equities in favor of the defendants, or either of them, purchased, for full value, the notes, with no intent to evade the usury laws of the state, and that his purchase was no part of any usurious transaction; that after the maturity of the notes, and in August, 1892, Morgan sold and delivered the notes to the plaintiff, for a valuable consideration, who has ever since been the owner of the notes. These findings, eliminating all incompetent and immaterial evidence, are fully sustained by the evidence. Assuming, then, that the notes were usurious, as between the original parties to them, we reach the vital question in this case, viz. did Morgan take the notes freed from the vice of usury; and, if so, did the plaintiff, by his purchase of them, acquire all of the rights and equities of Morgan in and to the notes, notwithstanding he himself was not a bona fide purchaser of the notes before maturity? The answer depends on the construction to be given to the proviso to section 2214, Gen. St. 1894, declaring all usurious notes, contracts, and securities void, which reads as follows: “Nothing herein shall be construed to prevent the purchase of negotiable mercantile paper, usurious or otherwise, for a valuable consideration by an innocent purchaser, free from all equities, at any price, before the maturity of the same, when there has been no intent to evade the provisions of this act or where said purchase has not been a part of the original usurious transaction. In any case however where the original holder of a usurious note sells the same to an innocent purchaser, the maker of said note or his representatives shall have the right to recover back from the said original holder the amount of principal and interest paid by him on said note.” Manifestly, this proviso was enacted in view of the fact that negotiable paper enters into the channels of commerce, and constitutes a large addition to the medium of exchange in the business world, and that its free circulation as such medium ought not to be hampered. The statute therefore makes no attempt to repeal the law merchant, as to usurious negotiable paper, but...